If you are a California Trustee, you have a heavy burden in carrying out your duties. Find out more in this video on the rights, obligations, and duties of a California Trustee.
- 1. Surviving Joint Tenants Don’t Have to Share
I have seen it a thousand times, a parent puts one child on title to a bank account or a house to “help manage” that asset. Well, the law presumes automatically that you want that asset to go 100% to the surviving joint tenant. If that is not your intent, then DO NOT set up joint tenancies. Surviving joint tenants do NOT have to share, so keep that in mind when setting up joint tenancy.
- 2. Your Will probably Controls Nothing
Your Will only controls assets held in your individual name. That means any Trust assets, joint tenancy assets, beneficiary designations, and pay-on-death/transfer-on-death account do not pass under the terms of your Will.
- 3. Trusts are meaningless without assets
If you created a revocable Trust, but you did not transfer any asset to it, then your Trust is meaningless. A Trust only controls assets transferred to the name of the Trustee. Without that transfer, your Trust is a pile of documents that do you no good when you need it most.
- 4. Divorce Does Not Affect Insurance Beneficiaries
Here is a shocker, in California a legal divorce will severe all sorts of joint ownership rights, but it will NOT affect the named beneficiary under a life insurance policy. That means that if your ex-spouse is named in your insurance as a beneficiary, they WILL RECEIVE the death benefit unless you change it after the divorce.
- 5. The Law Presumes You Know What You Are Doing
So many people have no idea what affect the titling of their assets have after they are gone, but the law assumes you know exactly what you are doing. That means it is up to your children to fight about it in court if you do something you do not intend to do. That’s where planning comes in. Even if you do not create a Trust, you can still plan out your affairs to be sure that your intent takes affect after your death.
- 6. Pay Now or Pay Later—Lawyer’s Prefer You Pay Later
Talking about planning, estate planning is far cheaper than dealing with the messy aftermath of an unplanned estate. Many people do not engage in planning because they don’t want to pay for it. But an unplanned estate will cost far more in the long run than the price of a good estate plan. Where a good estate plan may cost $3,000 to $6,000; a Trust or Will lawsuit can cost $30,000 to $50,000. Which one would you rather pay? So pay now or pay later—and lawyers much prefer you pay later by the way.
The growing area of California Financial Abuse; a lot can be learned from real life examples. In this video we describe California Financial Elder Abuse.
That’s a loaded question. It all depends on how the asset you are seeking to recover was titled. Even though you, and probably your parent, thought that all assets were in one basket and you can simply file one document to get what is rightfully yours, you are mistaken (welcome to Trust and Will law—be prepared for confusion). There are many ways in which assets can be titled so as to avoid the probate process. Sounds like a good idea, but it makes lawsuits in this area a real mess.
For example, if you have an asset titled ONLY in a decedent’s name (with no one else on title or titled joint as “tenants-in-common”), then that asset falls to the probate estate and the Will controls. If the Will is not favorable to you, then you have to file a Will contest.
If an asset is held in joint tenancy, then the asset passes automatically to the surviving joint tenant and the Will is meaningless. If you want to contest that arrangement then you either have to challenge the original account set up or you have to bring a petition in the decedent’s probate estate and claim that it was not his intention to leave the asset to the surviving joint tenant (a claim you are required by law to prove by the higher standard of “clear and convincing” evidence).
If the assets are in a Trust, then you have to file a Trust contest, which is different from a probate Will contest. With a Trust contest, you have to challenge either the Trust creation or the creation of a Trust amendment if one of the amendments does not favor you.
And if you have some assets in each of these different types of titling, then you have to file each of these different petitions. It is not unusual to have three or four different petitions filed in a single case. It can be a complicated affair and it’s easy to file the wrong claim in the wrong way and then lose out on challenging the asset you want to reclaim.
The bottom line: plan out your attack carefully. You may only have one chance to make things right.
If you are a Trustee of a California Trust, you have a lot to learn about your duties and responsibilities. And the law assumes you know your duties. In this video we discuss how to learn about your duties as Trustee.
Let’s pretend you have a crazy uncle that only wears pajamas even when going to places outside his home. He often goes to his neighbors’ houses and offers to buy all of their furniture even though the furniture is not for sale. And he sends strange gifts to family members through the mail, which usually consist of raw fish and raw meat. Does your uncle lack capacity to create a Trust or Will?
Maybe, maybe not, we don’t really know the answer to that questions based on the facts described in the paragraph above because under California Probate Code section 811 you can only prove lack of capacity by first establishing a mental defect. While all the actions described certainly sound crazy, they do not establish the existence of a mental defect. Your uncle may just be eccentric or “crazy” in the common sense of the word, but not in the medical sense.
A mental defect is typically a cognitive impairment created by conditions such as dementia or Alzheimer’s disease. A person with dementia may not do any of the things that crazy uncle above does, and yet a dementia patient could potentially lack capacity to create a Trust or Will.
Crazy uncle on the other hand may or may not have legal capacity, it all depends on whether he has a mental defect. He certainly has a gifting defect (sending raw fish in the mail), but until a mental defect is established, he is free to create or change his Trust or Will all he wants.
And that’s the difference between lack of capacity and just being eccentric.
Most Trusts allow Trustees to pay themselves “reasonable” fees for the work they do, but what is reasonable? That depends on the type of Trustee you have. In this video, Keith Davidson discusses some of the issues relating to reasonable Trustee fees that can be charged by your Trustee.
If you have an undue influence claim, here are the top five things you must consider in bringing your claim in court:
- 1. It’s a Two-Headed Monster
Starting January 1, 2014, the definition of undue influence was unified under Welfare and Institutions Code Section 15610.70. That means the same facts and circumstances that you use to directly prove undue influence to overturn Trusts and Wills are also used (or usable) to bring a financial elder abuse claim based on undue influence. So every Trust and Will contest becomes a potential financial elder abuse case too. And elder abuse claims are given jury trials, allow for punitive damages, and recovery of attorney’s fees—all things you CANNOT get in a Trust or Will contest lawsuit.
- 2. Equity Isn’t Enough
An unfair result, by itself, is not enough to prove undue influence. Unfortunately, a parent can treat a child unfairly if he or she chooses to do so. Undue influence is essentially the replacing of the decedent’s intent with that of a wrongdoer. So if the parent chose to act unfairly, so be it, the law has no problem with that. If a wrongdoer coerced the parent into acting unfairly, then you may have undue influence.
- 3. Shifting the Burden of Proof
Undue influence is one of the few claims where you can shift the burden of proof onto the wrongdoer to prove that they did NOT engage in undue influence. But to do so, you first need to prove that (1) the wrongdoer was in a confidential relationship with the decedent, (2) the wrongdoer actively participated in procuring the Trust or Will, and (3) the wrongdoer unduly benefitted from the new document.
- 4. You Still Need a Weak Mental State
The first element for undue influence is that the decedent was susceptible to being unduly influenced. They do not need to be incapacitated, per se, just susceptible to influence. The other elements focus on the actions of the wrongdoer, but you still need a medical expert to testify to whether the decedent was susceptible to undue influence.
- 5. Undue Influence Requires a Good Back-Story
Anytime you are asking the court to overturn a Trust or Will, you need a compelling reason to do so. California Trust and Will contests are decided by judges (called a bench trial) and judges are people too. Most judges have seen it all, so while your case may seem outrageous to you, it is just another case to the judge. And most judges want to reach the “right” result, which means your case needs to compel the judge to make things “right” by overturning the Trust or Will. Judges are not compelled to do that just because you ask them to do so. But they are inclined to act when presented with a back-story that shows that someone took an unfair advantage of a decedent. Therefore, a good back-story of events that occurred leading up to the Trust or Will creation is vital to winning your undue influence case in court.
In California, as in every other state, you can create a joint tenancy account with anyone you like, including a friend, caretake, or child. And most people know that a joint account automatically transfers to the surviving joint account holder at death. What you may not know, is who really is viewed as owning the account monies during your lifetime. In this video, Keith Davidson describes who owns your California joint tenancy bank account.
Make no mistake, litigation is a fight. If you are going to try to set aside a Trust or Will document, you have a fight coming your way. And in most cases, it can be a long, tough, expensive fight. Unfortunately, there is no other way to stand up for your rights but to go to court and fight for what is right. And once you step into the boxing ring, you have to expect to get hit (and sometimes hit hard).
That does not mean that you fold your tent and go home. Boxing is a game of endurance and perseverance as much as it is a show of strength. The longer you hold in there, the better chance you have at achieving a fair and just result. Sometimes that result comes in the form of a favorable settlement, sometimes it take a full-blown trial, and sometimes even just causes lose. But if you give up without a fight, then you are guaranteed to lose. That means the only way to win a just and fair result is to take your chances in the boxing ring.
Better yet, if you want to increase your changes of winning, then put in the effort and work it takes to provide the best effort possible when in court. Of course, that comes down to the right preparation for your case. And preparation takes time (and time is money). But without preparation, you have no idea if you can go the distance in your fight.
So the next time you step in the boxing ring, prepare for a tough fit, but hand in for the distance. Most people give in far before the case is over, so the long you can go, the better your chances for a just result.